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China Everbright Water Limited announced an acquisition over the weekend that will widen its geographical footprint in China to cover Liaoning Province and Inner Mongolia Autonomous Region.
Upon completion of the proposed acquisition, the company's contractual daily waste water treatment capacity will exceed 4.6 million tonnes a day. This is in line with the company's strategy to become one of the leading water companies in China, it said in a regulatory filing with the Singapore Exchange.
The company and its fully-owned subsidiary, Beijing Everbright Water Investment Management Co (BEWI), on Friday entered into an equity transfer agreement with the sellers - Dongda Group Co and Liu Yubao - to acquire the entire equity interest in Dalian Dongda Water Co and its subsidiaries.
Under the proposed acquisition, which is subject to conditions, BEWI will acquire the equity interests in three tranches.
The first two tranches, of 34 per cent and 56 per cent, will involve respective considerations of 302.22 million yuan (S$66.63 million) and 497.77 million yuan.
The remainder interest of 10 per cent, which shall be transferred in up to three phases over a three-year period, will involve a contingent payment of up to 203.15 million yuan.
Had the acquisition been completed on Jan 1, 2014, the group's net profit for FY2014 would have been HK$340 million (S$61.80 million) after the proposed acquisition, compared with HK$293 million pre-acquisition.
The company has made an application to the Singapore Exchange to seek a waiver of Rule 1014(2) of the Listing Manual, which requires the prior approval of shareholders for the proposed acquisition. The company submitted to SGX that the proposed acquisition should be regarded as being in the ordinary course of its business and an expansion of the group's existing core business. Moreover, there is no change in the risk profile of the company.